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Why Tax Cuts for Health Care Companies Won’t Benefit Patients

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By The Fiscal Times Staff

March 5, 2018

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The tax cuts passed in December will drop billions of dollars on the bottom lines of U.S. businesses, and most of that money is expected to end up in the pockets of investors through dividends and buybacks. A smaller percentage will likely be used for productive investments, and some will end up in workers’ pockets through one-time bonuses and wage hikes. Some companies may even use the cuts to lower prices to attract new customers – a win for consumers.

But health care analyst and former GOP congressional staffer Rodney Whitlock told Axios that health care companies are less likely to use their tax savings to benefit their customers than other types of firms, due in large part to the non-competitive nature of their business: "Companies lower prices on shoes, phones, cars (comparatively or versus inflation) to get your business. Health care pricing doesn't work that way. So the natural pressure to use the tax code to lower pricing...isn't there in health care," Whitlock said.

Erik Gordon, a University of Michigan business professor, agreed, saying that the tax cuts are "unlikely to lead to significant, long-lasting savings for patients."